Economy

San Francisco Rental Market Drives Applicants to Extremes

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Alma Freeman, Emil Meek and dog Pete have been on a grueling hunt for an affordable apartment in San Francisco.

San Francisco’s rental market usually cools down in the fall, but not this year. The average asking price for a one-bedroom in the city is now $2,673 a month, up more than 10 percent from last year. This big rent increase reflects a housing shortage fueled on one side by the recent wave of tech hires and the other by an absence of new units. In response, apartment hunting has returned to the frenzy of the dot-com boom, with prospective applicants packing open houses, forking over application fees and even engaging in bidding wars just to secure a temporary place to live.

I experienced this superheated market firsthand. My girlfriend and I spent three months this summer searching for an apartment. We saw over two dozen one-bedrooms, most for more than $2,200 a month, and almost all of them completely horrible. We're talking shag carpet, mold, and converted garages with no windows. Even the worst places we saw drew crowds. The open houses were like some twisted beauty contest where you had five minutes to tell your entire life story, woo the landlord, and leave everyone else in the dust. Emil Meek puts it perfectly: the process “turns you into a monster.”

I met Meek and his girlfriend Alma Freeman outside of a packed open house in Potrero Hill. They are in their mid-30s and both have that stretched-out look of put-on smiles and constant heartbreak. Meek is a landscaper and Freeman works for a non-profit downtown. They have great credit and collectively earn $110,000 a year, but they still can't find a place. Freeman says “it feels a little bit like you are looking on the sidelines and not really able to compete.” The desperation of the search has made them manic. They are arriving to open houses as much as an hour early, peeking into the windows to try and scope the place out, and doing everything in their power to get their application in before anyone else.

Even more worrisome Meek says, is how the process corrupts everyone involved. At one place they saw, the landlord was running a bidding war like it was some kind of game show. The couple had actually met the same landlord a week earlier at a different apartment, and there he had said he was looking to fill the vacancy with “just the right person.” At the second place, the “right person” had come to mean whoever was willing to pay the most money. He looked around at all the applicants and then said “sorry, it's San Francisco!” As disgusted as the couple was, it didn't stop them from putting down a bid of their own.

Part of the reason it's so hard for the couple to find a place is that they are looking for apartments close to the southbound freeways. Meek commutes to the South Bay for work, but unfortunately for him, so do many in the tech industry. The neighborhoods where they are searching—the Mission, Potrero Hill, Hayes Valley, the Castro—have been flooded by tech hires. Companies like Facebook and Google have made these neighborhoods even more desirable for their employees by setting up bus lines to shuttle them to and from work.

The couple has been hunting for an apartment full-time for about a month, and casually looking for almost six. Freeman scans Craigslist for postings constantly, but even so, she says they only find a handful of apartments every week to go and see. Many of the postings in the neighborhoods they want to live in are scams and others are well out of their $2,600 price limit.

When they finally do find a place they like, Freeman says they immediately contact the landlord and attempt to get in an application. If they can't finagle a private showing, they arrive about an hour early to open houses and ensconce themselves by the front door to make sure no one cuts in line—which has happened before. The couple brings along a big black portfolio stuffed with their papers—pay statements, hiring letters, business cards, even a reference for their dog. It's got so much vital information that Freeman calls it the “identity theft packet.”

Meek says the search reached an all-time low at this place in the Mission. People had completely filled the open house and they were spilling out onto the sidewalk. The landlord told everyone he wanted copies of their IDs, so Meek went running madly down Mission Street looking for a copy shop open on a Sunday. Freeman meanwhile was texting him frantically, telling him to hurry up. By the time he returned, the landlord had already taken a bunch of applications. Still dripping sweat and out of breath from the run, Meek handed over the IDs and pitched the landlord their life story in front of everyone at the open house. In five minutes the whole thing was over, and the couple left demoralized and humiliated.

This intense competition is a boon for landlords. Vacancies fill instantly and every unit rents for more than the last. But for conscientious property owners, the sheer number of applicants can make the process hectic and unsavory. Landlord Karen Heisler owns and lives in a big Victorian on Mission Street. She looks for tenants who can not only pay the rent but will also make the place feel like home, and she doesn't like to gouge tenants for the highest possible amount. She recently put up a one-bedroom at a few hundred dollars below market value. So many people mobbed the open house that it was difficult for her to assess anyone individually. She says it felt “a little bit, uncomfortably, like speed dating.”

The rental procedure isn't traumatic for everyone. 25-year-olds Paul McCloud and Will Bielinski moved here from Texas to work in the tech industry, and they found a place in less than a week. Granted, it's not in the same price range as the places Freeman and Meek are looking for. The pair are going to pay $3,900 a month for their two-bedroom in the Lower Haight.

McCloud says he feels lucky to have the flexibility to pay more, and realizes that if he didn't have a good job, the process would have been much harder. Once the price of rooms went over about $1,500 a month, he noticed that the competition dropped off sharply. To get their new place they only had to compete against a few other people.

McCloud is totally aware of the effect he and other new tech workers are having on the city. He says he wishes San Francisco would do more to handle the influx of tech workers and prevent “assholes” like him and Bielinski from driving out all the city's diversity. But at the same time, the city's lack of housing didn't stop him from moving in, and as he says, he's happy to be here and take advantage of the city as long as he isn't the straw that breaks the camel's back.

Two days after I met Meek and Freeman, they got offered that place in Potrero Hill. The real estate agent told Freeman it was like she was telling someone they made the high school cheerleading squad. Freeman says it's just a huge relief to finally be off the sidelines.